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LLOYD'S row over ‘prosecutions ban'
Sunday, January 18, 1998
Furious Lloyd's Names who lost money to scandals in the insurance market have seized on the strongest evidence yet that the Thatcher government intervened to stop underwriters being prosecuted for fraud.
A letter by Lloyd's former chief executive Ian Hay Davison to a name says ministers took the decision in the late Eighties ‘on policy grounds.' [See below.]
Now the Names -- private individuals who provided the majority of funds for Lloyd's until three years ago-- are to use the information to bolster an attempt to have their grievance heard by the European Court of Human Rights. Under the Lloyd's rescue deal hammered out in 1996, Names lost their right to sue players in the insurance market. But the settlement left open the possibility that they could sue the Department of Trade and Industry.
Hay Davison's astonishing assertion comes in the letter, written last month. He is widely credited with carrying out the first effective clean-up of Lloyd's between 1983 and 1986 after the market was hit by the scandals, starting in 1983, in which unsuspecting investors were lured into syndicates carrying bad risks.
His letter says he was ‘extremely indignant and disappointed' that the Government refused to take alleged fraudsters to court.
He had identified and disciplined 60 people, some in senior positions at Lloyd's. They were fined and expelled. Some senior insiders believe the Thatcher government decided not to prosecute partly because Lloyd's earned billions of pounds for the UK -- a suggestion that has especially angered the Names.
Two cases that did make it in court ended in acquittals. This was widely used to suggest that cases were too complex for juries to understand.
Names believe further criminal prosecutions could have deterred alleged fraudsters in the Nineties.
One Name, Earl Alexander of Tunis, is to champion a petition to the Court of Human Rights.
He said this weekend: " One woman has already submitted a petition which as passed the first hurtle in the process. We believe that it has been shown to be futile to try to get redress in this country because the [former] government's refusal to prosecute."
The Names will also demand to know which underwriters would have been prosecuted. "We want to know if any of these people carried on acting for us in the market into the Nineties," he added.
Text of Ian Hay Davison letter:
Thank you for your letter of 23rd November. During my time at Lloyd's and subsequently I had a series of lengthy interviews with the Serious Fraud Office concerning the various frauds. Regrettably, the Government, on policy grounds decided not to prosecute any of those involved and no successful prosecutions were brought. I was, and remain, strongly indignant and disappointed at this.
Ian Hay Davision
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